Rahman v. Gate Gourmet, Inc.

Background

Mohammed Rahman brought a putative class action and a claim under California’s Private Attorneys General Act against Gate Gourmet. He alleged that Gate Gourmet failed to compensate him and other employees for all hours worked, including time spent undergoing required searches off the clock and during periods that should have counted as overtime or meal breaks. The opinion states that Rahman worked as a non-exempt employee at Gate Gourmet’s San Francisco International Airport location from January 2014 through March 2020. It also states that Gate Gourmet is incorporated in Delaware and has its principal place of business in Virginia.

Rahman filed this case in May 2020. In May 2021, Gate Gourmet notified the court about a related class and PAGA action filed by a different plaintiff. The related case was first in federal court and was later remanded to California state court after the parties reached a proposed class settlement. Gate Gourmet represented that, if approved, the settlement would release all claims Rahman asserted in this case.

In July 2021, this court approved the parties’ agreement to pause the case while they assessed the proposed settlement. The stated reasons for the pause included the cost of discovery and motion practice, the possibility that the settlement could make Rahman’s case moot, and the orderly administration of justice. After a state-court hearing, Rahman moved to intervene in the related case, and the state court continued the hearing without ruling on intervention. The state court also asked the parties to seek this court’s views about which case should proceed.

Motion and Analysis

Rahman moved to lift the stay so that this case could be fully litigated. Gate Gourmet argued that the reasons supporting the original stay remained valid. The court explained that deciding whether to stay or lift a stay is within a district court’s control over its docket. The court considers the benefits of a stay, the hardship a party may face if the case proceeds, and whether a stay would simplify or complicate the issues, evidence, and legal questions.

The court concluded that the original reason for the stay—assessing the effect of the related proposed settlement—no longer justified keeping the case paused. The court also emphasized that Rahman’s case was filed first. It explained that first-filed principles generally favor the earlier case to promote efficiency, avoid duplicative litigation, and conserve judicial resources. The court stated that, had the related case remained in federal court, it likely would have been stayed or dismissed in favor of this case under the first-to-file rule, or possibly transferred to multidistrict litigation.

The court also discussed what it viewed as indications of a possible “reverse auction,” meaning a situation in which a defendant selects a preferred class lawyer or case to negotiate a settlement that may bind a broader class. The court noted that the related settlement was reached before class certification and that the related case was quickly remanded to state court after the settlement. These circumstances led the court to express concern that the arrangement could produce a settlement favoring the defendant and class counsel at the expense of the class. The court did not determine that the settlement was collusive; it said the state-court judge was better positioned to assess those concerns.

Disposition

The motion to lift the stay is GRANTED. The court did not decide the underlying wage-and-hour claims, approve or reject the related settlement, rule on Rahman’s request to intervene, or order the state-court case to be stayed. Instead, it stated that whether to stay the related case was for the state court to decide. Gate Gourmet was ordered to file a copy of the order on the related case’s docket within 24 hours. The December 1, 2021 case-management conference was continued to January 4, 2022, at 2:00 p.m. Judge William H. Orrick also directed the parties to update their joint case-management statement about the status of the related case and any needed schedule changes.